Fone Zone swallows Apple retailer Next Byte

By Stuart Corner
Tuesday, 21 August 2007 13:44

Deals

In a move that could be anticipating the launch of the iPhone in Australia, ASX listed cellphone retailer, Fone Zone has acquired  Next Byte, Australia’s largest specialist retailer of Apple products and services, for $21 million in cash and shares representing 12.9 percent of Fone Zone equity.

Fone Zone CEO, David McMahon, said: “The acquisition of Next Byte will broaden Fone Zone’s base of strategic partnerships and income streams, providing a significantly enhanced platform for future growth in the converging communications, computer and Internet markets...It enables us to complement our strong product offerings and exclusive relationship with Telstra in the mobile phone market with an equally strong proposition in the field of cutting edge computers and consumer electronics.”

According to Fone Zone, "Next Byte has a proven track record of growth and has been able to deliver consistently strong financial results while continuing to enhance its own market position through organic growth and strategic acquisitions." There are 17 Next Byte stores around Australia.  The current owners of Next Byte have agreed to three year employment contracts "to ensure the business continues on its growth path."

iTWire reported in February   that "Telstra's handset subsidy and dealer remuneration policies on its Next G network have had a devastating effect on the financials of Fone Zone, which claims to be Australia's largest specialist mobile communications retailer."

The company reported a 41 percent decline to $6.1 million in EBITDA for the six months to 31 December despite boosting revenues 13 percent to $99.1 million. Net profit after tax fell from $6.2 million to $1.9 million. The company integrated 15 stores acquired from Communique and opened a further during the half year five taking its total to 149.

The Fone Zone Group will report its full year results for the year ended 30 June 2007, on Tuesday 28 August. It says results are expected to be consistent with the guidance issued in December 2006. Completion of the Next Byte purchase will occur during September, after which further details of the financial outlook for the combined organisation will be provided